This study investigates the impact of corporate ownership structure and board size on earnings management for a sample of Turkish firms registered on the Istanbul Stock Exchange (ISE) for the period of 2009 to 2012. The corporate ownership structure is measured with two variables: managerial ownership and institutional ownership. The board size can be defined as the number of members in the board. This study also uses three controlled variables: return on assets, size of the firm and financial leverage. The adjusted Jones Model (Dechow, Sloan and Sweeney, 1995) and the multivariate regression technique are utilized to examine the effect of corporate ownership structure and board size on earnings management. The results consistent with the previous studies show that the institutional ownership and the board size have a negative significant effect on the earnings management while the effect of the managerial ownership on the earnings management has positively statistically significant. The findings also reveal that the return on assets has a positively statistically significant effect on earnings management. However, the impact of the financial leverage on earnings management is negatively statistically significant.

Purpose – The purpose of this paper is to examine the impact of Turkish individual investor sentiment on the Istanbul Stock Exchange (ISE) and to investigate whether investor sentiment, stock return and volatility in Turkey are related. Design/methodology/approach – This study used the monthly Turkish Consumer Confidence Index, published by the Turkish Statistical Institute, as a proxy for individual investor sentiments. First, Turkish market fundamentals were regressed on investor sentiments in order to capture the effects of macroeconomic risk factors on investor sentiments. Then, it used the impulse response functions (IRFs) generated from the vector autoregression (VAR) model to examine the effect of unanticipated movements in Turkish investor sentiment to both stock returns and volatility of the ISE. Findings – The generalized IRFs from VAR shows that unexpected changes in rational and irrational investor sentiment have a significant positive impact on ISE returns. This suggests that a positive investor sentiment tends to increase ISE returns. The study also documents that unanticipated increase in the rational component of Turkish investor sentiment has a negative significant effect on ISE volatility. This might indicate that investors have optimistic expectations of the economy overall with respect to market fundamentals in Turkey. This optimism can result in creating positive expectations, reducing uncertainty, and reducing the volatility of stock market returns. Research limitations/implications – The study was applied only for the period 2004-2010 on the ISE stock returns and volatility. Practical implications – Regardless, investors should know the impact of irrational investor sentiments while establishing investment strategies. The results of this study may also help policy makers stabilize investor sentiments to reduce stock market volatility and uncertainty. Originality/value – This paper adds to the limited understanding of investor sentiment impact on stock return and volatility in an emerging market context.

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Purpose -This paper examines the effect of rational and irrational investor sentiment on the stock return and volatility of US auto, finance, food, oil and utility industries. Design/methodology/approach -The American Association of Individual Investors Index (AAII) is used as a proxy for US individual investor sentiment. The US market fundamentals are regressed on investor sentiment in order to capture the effect of macroeconomic risk factors on investor sentiment. Then impulse response functions (IRFs) are generated from a VAR model to investigate the effect of unanticipated movements in US investor sentiment on both industry-specific stock return and volatility. Findings -The results show a significant impact of investor sentiment on stock return and volatility in all the industries. We find that the positive rational component of US individual investor sentiment tends to increase the stock return in these industries. We also document that unanticipated increase in the rational component of US individual investor sentiment has a significant negative impact only on the industry volatilities of US auto and finance industries.Research limitations/implications -The results are based only on the 1999 -2010 US industryspecific stock return and volatility data and are confined to these industries. Practical implications -The findings of this paper can help investors to improve their asset return generating models by incorporating investor sentiment. The findings can also help policymakers to design policies that stabilize sentiment and reduce volatility and uncertainty in the stock markets. Originality/value -This paper adds to the growing literature on behavioral finance by filling a gap and addressing the impact of investor sentiment in the various US industries.